We all have to eat—so why are lunch expenses sometimes counted as business expenses? We reached out to CPA, church finance specialist, and Church Law & Tax Editorial Advisor Vonna Laue for her insights on this topic and how churches can implement best practices regarding lunch expenses.
What is required for a lunch to be considered a business expense?
For lunches to qualify as a business expense, they need to have a legitimate business purpose, and that purpose has to be documented. Similar to needing receipts whenever there’s a meal involved, you also need to document who participated and the ministry purpose for the lunch. You have to be honest and legitimate about your claim, and if it were ever challenged, the standard would be: “What would a reasonable person say?” If a youth pastor is claiming they’ve got a business lunch every day, a reasonable person may look at that and say, “That’s abusive.” A youth pastor may have a number of meetings outside of the church with students who are near the church: at a high school, a college campus, or somewhere similar. But would a reasonable person look at it and say, “That seems prudent to me”?
There isn’t a hard and fast rule or a checklist you can complete. But you need to make sure you can legitimately document a lunch’s purpose and that if other people look at it, they’d determine the expense was reasonable.